In the relentless pursuit of justice against fraudulent trading practices, former JPMorgan Chase & Co. (NYSE:JPM) gold trader Christopher Jordan has been sentenced to serve six months in prison. This conviction stems from deceptive orders placed by Jordan between 2008 and 2010, as ruled by US District Judge Edmond Chang in Chicago.
This recent sentencing follows the two-year prison term handed down to JPMorgan’s former top gold trader, Gregg Smith, marking the most severe punishment to date in the US government’s ongoing efforts to curb dubious trading practices. Additionally, Michael Nowak, the desk’s former supervisor, received a one-year prison sentence. However, two other individuals involved in the case managed to avoid incarceration after pleading guilty and cooperating with authorities.
These cases involving JPMorgan have been at the forefront of federal crackdowns on major Wall Street banks, including Bank of America Corp (NYSE:BAC), Deutsche Bank AG (NYSE:DB), and Morgan Stanley, for spoofing—an illegal form of market manipulation. In 2020, JPMorgan agreed to a $920 million settlement following allegations brought by the Justice Department. This marked the largest fine imposed on any financial institution for market manipulation since the Global Financial Crisis.
Spoofing involves the placement of significant buy or sell orders with no intention of executing them. These orders are swiftly canceled, but not before they create a false impression of market demand, thereby influencing prices. This practice was declared illegal following the adoption of the Dodd-Frank Act in 2010.
Christopher Jordan worked at JPMorgan’s precious-metals desk for approximately three years and briefly for Credit Suisse AG in 2010. Prosecutors alleged that it was during his tenure at JPMorgan that Jordan placed orders for precious metals without any genuine intent to execute them.
The core of the case centered on a 2018 meeting between Jordan and an FBI agent. Prosecutors contended that Jordan confessed to engaging in fraudulent trading during this meeting. This assertion, however, was contested by Jordan’s defense attorneys, who vehemently maintained that their client never specifically admitted to spoofing, fraud, or any other illegal activities. This defense was supported by the testimony of FBI agent Jonathan Luca during the trial.
Gregg Smith, known as the most active spoofer on JPMorgan’s global trading desk, was notorious for rapidly placing and canceling orders—a behavior that led to jokes among colleagues about him needing to cool his fingers with ice.
Last year, federal jurors in Chicago convicted Smith and Nowak after determining that they had employed deceptive trade orders to manipulate precious-metals prices for profit from 2008 to 2016. In previous trials, two former precious-metals traders, one from Deutsche Bank and one from Bank of America, were also found guilty of spoofing, each receiving a one-year prison sentence.
During Jordan’s trial in December, his defense argued that he had traded “according to the rules as he understood them,” cautioning jurors against applying current standards to his trading activities from 2008 to 2010. The case is officially known as US v. Smith et al, 19-cr-00669, in the US District Court for the Northern District of Illinois in Chicago.
